Strategic entrepreneurial choice between competing crowdfunding platforms
- Resource Type
- Authors
- Jerry Coakley; José Manuel Liñares-Zegarra; Aristogenis Lazos
- Source
- The Journal of Technology Transfer. 47:1794-1824
- Subject
- Microeconomics
Shareholder
Accounting
General Engineering
Commercial law
Strategic Choice
Multinomial probit
Equity crowdfunding
Business
Business and International Management
Venture capital
- Language
- ISSN
- 1573-7047
0892-9912
This paper investigates strategic entrepreneurial choice between the UK Big 3 platforms–Crowdcube, Seedrs and SyndicateRoom–that exemplify the three main equity crowdfunding (ECF) shareholder structures identified in the literature. ECF has become a strategic choice for both entrepreneurs and angel and venture capital funds as it offers mutually beneficial advantages to both, especially under the co-investment ECF model where these funds co-invest alongside the crowd. The multinomial probit results show that large founder teams are more likely to choose the co-investment model (SyndicateRoom) but are less likely to opt for the nominee ownership structure (Seedrs). Although less heterogeneous teams are more likely to choose the Seedrs and Crowdcube ownership structures, our results suggest that the probability of choosing the co-investment model (SyndicateRoom) monotonically increases as teams become more heterogeneous. The conclusion is that larger and heterogeneous teams are more likely to raise ECF funds from campaigns explicitly involving professional investors.